If Performances Are Canceled Due to COVID-19, Venue Rental Fees Will Be Refunded... Fair Trade Commission Addresses 'Venue Power Abuse'

Correction of Unfair Terms in Rental Contracts at Five Major Venues Including Sejong Center for the Performing Arts

[Sejong=Asia Economy Reporter Kwon Haeyoung] Major domestic performance venue operators have agreed to reduce excessive penalties for cancellation of venue rental and to refund payments already received if the rental is canceled due to administrative orders related to the spread of infectious diseases such as COVID-19.

The Fair Trade Commission announced on the 13th that it reviewed unfair terms in the rental contracts of five public and private performance venues, including Sejong Center for the Performing Arts, Seoul Arts Center Opera Theater, Blue Square (Interpark Theater), Charlotte Theater (Lotte Cultureworks), and LG Arts Center (LG Yeonam Cultural Foundation), and that the operators voluntarily agreed to correct all such terms.

The operators revised the provision that imposed penalties ranging from 40% to 100% of the usage fee if the renter cancels the contract.

Considering that preparing for various performances or events requires at least 6 to 9 months, if the renter cancels the contract 9 months before the start date of use, the penalty will be minimized. If the contract is canceled after that, a certain level of penalty will be imposed within the normal scope of damages for the operator, but if the operator secures a substitute performer, the penalty will be adjusted accordingly.

When the contract is canceled due to the operator's circumstances, the provision that only refunded the renter's payment without imposing a penalty was revised so that the operator also pays a certain level of penalty. Renters can cancel or terminate the contract without necessarily obtaining the operator's approval, and the provision that shifted all responsibility for damages to the facilities onto the renter was also amended. Grounds were established to refund the rental fee in case of force majeure such as natural disasters occurring outside the performance facility.

The provision allowing the operator to immediately and unilaterally terminate the contract if the renter violates the contract or delays payment of the rental fee was amended to include a notice (催告) procedure that urges contract fulfillment within a certain period.

Abstract and vague phrases among the reasons for contract termination, such as 'disorderly conduct in the performance venue,' 'special circumstances,' and 'defamation,' were deleted or specified.

Additionally, considering the difficulties of renters such as performance planning companies, the operators partially revised the contract deposit and balance payment terms, which were not unfair terms, and newly established clauses related to infectious diseases. The contract deposit, which was about 30%, was reduced to 10-15%, and the balance, which was usually collected up to 6 months before the performance start date, will now be collected at the ticket sales point 3 months before the performance start date.

A new provision was created to refund the rental fee for the days the venue could not be used if an administrative order is issued due to infectious diseases such as COVID-19 and the performance contract is canceled.

The operators plan to apply the revised contracts to contracts concluded from January next year.

A Fair Trade Commission official said, "With this correction of terms, disputes between performance venue operators and performance planning companies will decrease, and the rights and interests of performance planning companies, which are in relatively disadvantaged positions, will be strongly protected," adding, "We will also cooperate by delivering the correction cases to the Ministry of Culture, Sports and Tourism so that they can be reflected in the 'Standard Contract for Performance Venue Rental.'"

This content was produced with the assistance of AI translation services.